Bank of Thailand announces blockchain pilot project

According to a recent report, The Bank of Thailand (BoT) has announced that it has initiated a pilot of the DLT Scripless Bond Project that utilizes blockchain technology.

According to the project’s outline, part of BoT’s mission to prepare its people for disruptive technologies, Bank of Thailand (BoT) has started to look at the benefits of distributed ledger technology (DLT) and blockchain technology.

BoT expects blockchain technology to enable all stakeholders to have access to the same information, increasing efficiency and transparency.

Once completed, this initiative will help increase efficiency, whilst also reducing the total operating costs of the entire system, and it will be developed later on to form the basis for Thailand’s market infrastructure for government and corporate securities. This is one of the world’s first uses of blockchain technology in the field of government savings bond sale

The Bank of Thailand will conduct the pilot in collaboration with a number of organizations including the Public Debt Management Office, Thailand Securities Depository (TSD), Thai Bond Market Association, and Selling Agents that include Bangkok Bank, Krungthai Bank, Kasikorn Bank, and Siam Commercial Bank. IBM is the technology partner for the project.

The project manifesto outlays the objectives that BoT plans to meet with The DLT Scripless Bond Project, which is aimed not only to enable BOT to gain deeper insights and develop capabilities and the implications of using blockchain technologies, as well as potential benefits in reducing overall costs to the industry, as well as maximizing operational process efficiencies.

In order to identify both weaknesses and opportunities for blockchain technology, the project prototype was designed and developed with the following key features:

Data integration and bookkeeping: to integrate all relevant data as the single source of truth and record all transaction activities

Real-time information accessibility: to access information in near real-time to enable more rapid analysis and more effective management

Smart contracts & automation: to facilitate more effective operations through smart contracts so as to maximise the reduction of manual intervention.

Reports and monitoring: to monitor information and enable visibility to authorized participants (on a ‘need-to-know’ basis).

The central bank said that it has started to look at the benefits of distributed ledger technology (DLT) and selected the savings bond sales processes as its first use case.

This is one of the world’s first uses of blockchain technology in the field of government savings bond sales, according to the project whitepaper.

Bonds-related processes are complex and involve a number of participating entities. In the existing setup, it takes 15 days for investors to receive their bonds after receiving an allocation.

The Bank of Thailand said that the Proof of Concept (POC) has demonstrated that the DLT Scripless Bond could successfully meet core business demand while generating business values for all relevant parties.

Individual investors are able to receive the bond within 2 days, from its current period of 15 days. They can also purchase a bond with their full rights from any Selling Agent without the current purchasing limit per bank

Selling Agents, TSD, and BOT can reduce the complexity of their operational processes.

Bond Issuers can monitor and manage bond sales in real time, increasing competition among Selling Agents.

In the future, the Bank of Thailand plans to develop the system so as to form the basis for Thailand’s market infrastructure for government and corporate securities.

The Proof of Concept of this project is only the first step toward the real-world implementation that would initially cover government savings bond, which is expected to begin by the end of 2019, the official statement said.

Alita Sharon is a writer at OpenGov Asia. She has studied Psychology, Political Theory, and English. She is passionate about mental health and understanding the nature of human relationships. Alita is an avid reader; the list of her favourite books includes Catch-22 by Joseph Heller and Down and Out in Paris and London by George Orwell. Alita also loves writing and listening to podcasts on current affairs, culture, history, and science. During her academic career, Alita often spear-headed the organisation of university events and workshops. Alita plans to pursue her higher education in International Development and Psychology.

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